6.3.20 Deeming Actual Earnings for Casual Employees

A casual employee may be disadvantaged when determining their incapacity payments during a period of unpaid leave.  This may be the case where we deem an ability to earn based on actual earnings which include a loading in lieu of leave entitlements.  Accordingly, for casual employees the amount of any deemed ability to earn should exclude any loading.

When a person is on approved leave (paid or unpaid) from their employer we treat the period of leave as actual hours worked, for the purpose of calculating the percentage of NE.  For example, a person who works 20 hours per week and takes leave will continue to have their top-up incapacity payments based on 90% of NE less the deemed AE.

Case study

A former member has an NE of $1,000 and following rehabilitation obtains casual employment working full time and earning $720 per week, which amount includes a 20% loading in lieu of leave.  In this scenario it is only appropriate to deem the person with an ability to earn $600 per week.  While he is working his incapacity payments are based his actual earnings of $720 per week.

$1,000     -      $720     =      $280

At Christmas time his employer closed down for 3 weeks.  At this time the former member's incapacity payments should be calculated based on his deemed ability to earn of $600 per week for his normal working hours.

$1,000     -     $600     =     $400

This is consistent with how we treat full-time employees on top-up, but who also accrue paid leave entitlements, where we consider they are working their normal working hours during periods of paid leave.

In some instances employees may be employed on a casual rate of pay during an initial probationary period and then be placed on a permanent rate of pay after successfully completing the probationary period.  The arrangements above would only apply during the period the person receives casual rates.  When the person changes to a permanent rate of pay any deemed ability to earn is based on actual earnings.